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Fitch Ratings has downgraded the Indiana Finance Authority's private
activity bonds (PABs) issued on behalf of I-69 Development Partners LLC
(I-69 DP or the Developer) for the I-69 Section 5 project to 'BB' from
'BBB-'. The bonds remain on Rating Watch Negative.

The downgrade reflects continued delays in construction and unresolved
payment issues between the construction contractor and subcontractors,
culminating in two Notices of Default issued by the Developer to the
construction contractor, citing failure to promptly pay subcontractors
and falling behind on an existing remedial plan, which have 20 and 60
day cure periods, respectively.

Delay risk is also heightened by the financial deterioration of Isolux
Corsan SA (Isolux), parent of the construction contractor,
Corsan-Corviam Construccion SA, whose rating was revised to 'RD'
(Restricted Default) from 'C' on Aug. 3, 2016, reflecting the execution
of a Distressed Debt Exchange following recent filings for forms of
court protection. The company has confirmed that, to date, it has met
payments but non-payments are planned under restructuring plans.

KEY RATING DRIVERS

Construction Delays, Weak Guarantor (Completion Risk -Midrange): The
credit quality of Isolux Corsan SA (Isolux), the parent company of
I-69's construction contractor Corsan-Corviam Construccion SA, has
deteriorated significantly in recent months resulting in a downgrade to
'RD'. In addition, Fitch believes the revised recovery schedule
completion date of June 28, 2017 will be challenging to meet, given that
the construction contractor is substantially behind the anticipated
expenditure curve for 2016. The project has a four month tail from the
revised completion to the long stop date that provides some cushion.
However, uncertainty remains. Fitch will continue to monitor the
adequacy of this tail period.

Strong Counterparty, Clear Payment Mechanism (Revenue Risk - Stronger):
Milestone and availability payments during the project are made by
Indiana Finance Authority (IFA, or the grantor), and Fitch currently
rates such counterparty obligations 'AA'/Outlook Stable. Indexation of
20% of periodic availability payments to the Consumer Price Index (CPI),
with remaining 80% escalated at 2.5% per annum, hedges inflationary
operating and lifecycle costs. The payment mechanism is in line with
peers.

Straightforward Operations, Handback Risk Well Managed (Cost Risk -
Midrange): The project company will self-perform most operation and
maintenance (O&M) activities, exposing it to O&M and lifecycle cost risk
over the project life. O&M works are generally considered relatively
straightforward given the limited scope of the project. The major
maintenance reserve account (MMRA) and handback requirements reserve
account (HBRA) are both designed such that major works should be
anticipated from a funding perspective several years ahead of
incurrence. The project's cost profile is significantly back ended, with
a large part of lifecycle works anticipated during the handback period;
however, since final debt maturity is five years prior to concession
maturity, bondholders are not exposed to handback risk.

Conservative Debt Structure (Debt Structure - Midrange): Structural
features, including the fixed interest rate payable, full amortization,
1.15x dividend lock-up and debt service reserve account (DSRA), provide
bondholders with protection against adverse developments over the
project life. The DSRA is sized at six-month's debt service, which is at
the tighter end of projects in Fitch's rated portfolio, constraining the
risk factor assessment.

Peer Analysis: The project's closest peer is WVB Partners, which also
features IFA as grantor/issuer and a similar contractual framework;
while WVB Partners features a stronger construction JV, works are
considered materially more complicated and, furthermore, I-69 features a
stronger performance security package. Delays have been experienced on
both projects, although issues during construction appear to be more
acute for I-69. Minimum DSCRs between the two projects are comparable,
while I-69 demonstrates stronger average.

RATING SENSITIVITIES

Negative - Failure to Cure Contractor Defaults: The contractor's failure
to cure existing events of default within the requisite cure period
could lead to further delays in completion and likely result in further
rating downgrades.

Negative - Further delays: Additional delays experienced that jeopardize
the likelihood of meeting the revised recovery schedule completion date
of June 28, 2017 would result in a further downgrade.

Negative - Operational Underperformance: Significant sustained payment
deductions being levied against the project company or materially higher
costs during the operating period than currently forecast, either of
which reducing coverage levels well below current projections, would
also place the rating under some pressure.

Positive - Unlikely During Construction Period: Positive rating
migration during construction is highly unlikely given completion risk
issues facing the project. If the project is successfully completed,
positive rating migration back to its previous level will likely occur
assuming no material change to the project's operating profile.

SUMMARY OF CREDIT

On April 7, 2016, Fitch downgraded the IFA's PABs to 'BBB-' on Rating
Watch Negative, which reflected the deteriorating credit quality of
Isolux coupled with the I-69 project's projected eight-month delay in
substantial completion. The revised recovery schedule completion date is
the result of delays in obtaining necessary permits and non-payment from
the contractor that led to some subcontractors demobilizing from the
site. Payment issues have not been resolved with all subcontractors
leading to continued delays to the project, which is already
significantly behind schedule.

The persistent payment issue between the construction contractor and
subcontractors has resulted in the Developer issuing two Notices of
Default to the construction contractor on Aug. 4, 2016 as follows: (i)
Failure to promptly pay subcontractors (20 day cure period), and (ii)
Failure to present a remedial plan (60 day cure period).

Fitch believes the revised recovery schedule completion date of June 28,
2017 will be challenging to meet. Based on the revised cash-flow
schedule, Isolux is substantially behind the anticipated expenditure
curve. Actual drawdowns from April to June 2016, a means Fitch uses to
measure construction progress, fell over 60% below the scheduled amount.
Actual drawdowns for the month of July are expected to be significantly
under the scheduled drawdown of $18.4 million. In total, the project is
behind the anticipated cumulative drawdown by over $38 million, which is
over 10% of the entire contract value. Additionally, agreements required
to start work on certain sites are still undergoing negotiations.

Significant construction progress (70% - 80% completion) in the next
three months is critical in order for the project to meet its revised
recovery schedule completion date of June 28, 2017. Fitch will evaluate
the project's remedial plans under both notices of default and the
progress on construction over the next few months. Unless significant
construction progress occurs over the next several months and the
default issues are adequately addressed, further negative rating action
is likely.

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